This month I've been looking at a number of shares that Bell Potter has rated as its top picks for FY 2023. You can read about its tech picks here and its energy picks here.
On this occasion, let's take a look at a couple of ASX healthcare shares that Bell Potter is tipping as buys this financial year.
Bell Potter notes that the biotechnology sector has been hit hard by the market correction. This has led to some of its recommendations being crushed despite "making encouraging progress either in the clinic or in commercialisation."
In light of this, the broker believes that now is the time for investors to invest and take advantage of this share price weakness.
Now is the time to concentrate on those names with sufficient capital to carry on through this downturn and with assets in areas of high unmet need. In our view both large pharma and private equity investors are likely to take advantage of the current depressed valuations.
With that in mind, here are two ASX healthcare shares it rates as buys:
Avita Medical Inc (ASX: AVH)
The first healthcare share that Bell Potter is bullish on is Avita Medical. It is a regenerative medicine company which has created a technology platform that allows it to address unmet medical needs in burns, chronic wounds, and aesthetics indications.
The broker currently has a speculative buy rating and $3.00 price target on the company's shares. This compares to the latest Avita share price of $1.66.
It said:
AVH and others in the wound care space endured a very difficult two year period throughout the COVID-19 pandemic. Most of those access restrictions (for AVH clinical support staff) to US hospitals have lifted since the commencement of 2022. Access to surgeons and theatres is crucial for training purposes in the use of the Recell device, particularly in the current environment where there has been a high turnover of clinical positions within the hospital sector. We expect strong sequential quarter growth in the June quarter as more normal market conditions return. Short term catalysts include the upcoming release of headline data from clinical trials in trauma wounds and vitiligo. AVH remains well capitalised with cash of US$95m.
Telix Pharmaceuticals Ltd (ASX: TLX)
Bell Potter is also bullish on this radiopharmaceutical company. This is due largely to its Illuccix product and its significant market opportunity.
The broker currently has a speculative buy rating and $8.10 price target on its shares. This compares to the latest Telix share price of $5.19.
It commented:
Telix Pharmaceutical's first radiopharmaceutical drug (Illuccix) for the imaging of recurrent prostate cancer was approved in late 2021. Since then the company has made stellar progress towards commercialization in the US and Australia. PSMA imaging is now included in the NCCN guidelines for management of recurrent prostate cancer and reimbursement is also now approved in the US. The addressable market is expected to be worth in excess of US$1bn annually with Illuccix being one of three competitors in the US. The company is well capitalised following a $170m raise earlier this year and revenues from product sales are expected to generate the company's maiden profit in FY23.
